Flat Sales Throw Sears For Loss

February 06, 1986|By Janet Key.

Battered again by flagging profits in its merchandise business, Sears Roebuck and Co. Wednesday reported a 1.9 percent decline in its consolidated earnings for the fourth quarter of 1985. Profits fell 10.4 percent for the full year.

Chicago-based Sears, which among other businesses operates the country`s largest retailer, reported net income of $552.3 million, or $1.50 a share, for the fourth quarter, down from $563.1 million, or $1.54 a share, a year earlier.

Revenues increased 6.1 percent, to $12.07 billion in the fourth quarter from $11.37 billion in the like 1984 period.

In the full year, Sears` net earnings dropped 10.4 percent, to $1.3 billion, or $3.53 a share, from $1.45 billion, or $4.01 a share, in 1984. Revenues increased 4.9 percent, to $40.72 billion from $38.83 billion.

Profits in the Sears merchandise group, which were flat in the third quarter, dropped 13.9 percent in the fourth period, to $384.5 million from $446.5 million a year earlier. Revenues remained steady at $8.18 billion.

The merchandise group`s profits in 1985 fell 15.4 percent, to $765.7 million from $905.2 million in 1984, while revenues remained flat at $26.55 billion.

Edward A. Brennan, Sears chairman, said the merchandise group`s income in the fourth quarter and full year was hurt by ``flat sales in the most competitive environment in retailing history.``

Operating income from Sears` merchandising group and Allstate insurance, Dean Witter financial services, Coldwell Banker real estate and Sears World Trade operations declined 23.2 percent in the fourth quarter and 19.9 percent for all of 1985, Sears said.

Net capital gains after taxes and other income totaled $100 million in the fourth quarter, up from $45.9 million a year earlier. These gains totaled $263.9 million for the full year, up from $221.2 million in 1984, Sears said. Sears` Allstate insurance subsidiary reported fourth-quarter income rose 12.4 percent, to $179.1 million from $159.4 million in the similar 1984 quarter. Revenues climbed to $2.78 billion from $2.30 billion.

After one of the worst storm-loss years in history, Allstate--the country`s second-largest property and casualty insurer--reported that 1985 income fell 8.5 percent, to $604.8 million from $660.7 million in 1984. Revenues increased 15.5 percent, to $10.38 billion from $8.99 billion.

The Dean Witter financial services group, which recently launched the Discover credit card, posted fourth-quarter profits of $3.8 million after a $3.9 million loss a year earlier. Fourth-quarter revenues increased 24.4 percent, to $824.2 million from $662.8 million in 1984.

The Coldwell Banker real estate group increased its fourth-quarter profits 76.8 percent, to $25.1 million from $14.2 million in the year-earlier period. Revenues in the quarter increased 24.3 percent, to $268.7 million from $216.2 million.

Sears World Trade Inc., which is headquartered in Washington D.C., cut its losses to $37.9 million from $45.4 million in the fourth quarter of 1984. Revenues increased 33.6 percent, to $75.2 million from $56.3 million.

In the third quarter, Sears` profits tumbled 18.5 percent, to $262.2 million, largely because of a 39 percent drop in earnings from its Allstate insurance subsidiary and flat profits in its merchandising operation. Allstate was hit with $33 million in losses from Hurricanes Elena and Gloria.